Google AdWords (those sponsored links that appear alongside search results and web content) can be one of the most cost-effective ways to advertise on the web. Your ads are highly targeted based on keywords, and you don’t pay for anything unless they are clicked.

But often, small businesses set up a campaign and load it with relevant phrases, only to see little traction. Or worse, they get clicks (which cost money) but aren't converting them into sales.

If you’re struggling to hit pay dirt with Google ads, or you’re interested in signing up but not sure where to start, take some cues from these small business success stories.

Where to Begin

Before you get started, “know that AdWords is a real commitment, and is likely to be a time drain,” says Chris Conn, founder of MightyNest.com, purveyors of organic and naturally made home wares and accessories. His company uses AdWords to drive potential customers to the online store. “It will take from other activities, so make sure that fits with your priorities.”

In that regard, start small, says Timothy Thomas, a small business consultant who cultivates successful AdWords campaigns for his clients.

“Focus on one campaign, lock your budget and use the tools provided by AdWords to learn how Google does its magic,” Thomas adds. He recommends that companies continue their standard SEO efforts in order to rank high in organic search for free (more on this in a bit), and then optimize an AdWords campaign accordingly. “Don't buy ads in areas where you are getting a top-five link already. Think about terms that are unique to your offering and try to make the most of those keywords by standing alone in paid search.”

If you’re trying to get the maximum value out of a small AdWords budget, don’t worry about appearing at the top of every search. “Keep your bids as low as you can and edge them up — you do not need to be the number one paid search term, however being in the top three is valuable,” says Thomas. “Being number one in the wrong search will only cost you money.”

When you settle into an AdWords campaign that works for your budget and time, think about using the platform to glean a bit more insight into what your potential customers want.

Conn uses AdWords as a real-time testing and intelligence tool. “If we want to know what messaging works, we launch a quick AdWords campaign to see how customers respond.” Making fine adjustments based on small messaging changes can really hone your ads and give you the most bang for your pay-per-click buck.

AdWords and SEO Go Hand-in-Hand

A theme that held true for all the small businesses we spoke with was the importance of traditional SEO as it relates to AdWords campaigns.

And the tides flow in both directions. Jordan Schaffel, co-founder of Say It Visually, a company that produces animated instructional and demo videos, explained that their existing SEO efforts were crucial to the success of their AdWords campaign.

“When we re-did our site recently, we had AdWords in mind, so we did our homework prior to re-launching,” Schaffel says. “Without the foundational efforts, we would've struck out, or at the very least, been behind the eight ball on getting clicks through our AdWords campaigns.”

Schaffels’ strategy included titling and tagging all of their videos to tie in closely with the AdWords campaigns. “If you fail to do one or more of the pieces of the SEO puzzle, you're hurting yourself exponentially.”

One of those puzzle pieces is knowing when not to pay for search terms that you already own for free. “If Google can match your ad to a search, they are happy to sell a click whether it’s a good one or not. The only valid strategy is to narrow Google's ability to present your ad,” explains Thomas. Make sure your AdWords keywords are embedded in the HTML of your website, and if you're already dominating a search term organically, don't buy it from Google. "You only want to pay for eyeballs that you can't get in front of organically.”

Optimization

Even if you have a good AdWords campaign that’s producing quality leads, there’s always room for improvement. In some cases, it can be a complicated matter. Thomas says he worked with an engineering company that specializes in LED lighting and testing. Its customers are technically trained engineers, but its ads were being surfaced by consumers looking for Christmas lights, Xbox controllers and LED TVs. In short, the company was spending money on lots of useless impressions and clicks.

“The solution was eliminating ‘broad matching’ criteria,” says Thomas. “We put our keywords into either Phrase Match or Exact Match. Each day we would look at what the company had paid for on the previous day and just started [adding] negative keywords. Words like ‘Christmas,’ ‘automobile,’ ‘rope light,’ ‘Playstation,’ and all the variants for 'television' were identified and blocked from matching.”

Thomas adds that “the daily review and elimination of inappropriate search matches is the secret sauce of mastering AdWords. You have to tune AdWords for about 15 minutes every day or it can eat you alive, financially.”

Closing the Deal

Like any good lead-generation tool, it's how you turn an interested click into a repeat customer that really counts.

“It is important that you build a relationship with the customers you find through AdWords and that a meaningful amount of those relationships are sustainable in the long run,” says Conn. “If not, AdWords can turn into a treadmill.”

In the case of Thomas’ engineering client, most of the potential customers know what they’re looking for by the time they reach the company’s website. Once they’ve clicked through, “we encourage them to approach us by phone so we can really help them find the service or product they need.”

Schaffel’s company takes it a step further by monitoring real-time analytics. “We use Woopra to track people coming to our site from AdWords (and other links), and we see patterns emerge when people are truly interested in creating explanation videos.” Paying attention to traffic patterns like this can help you fine-tune your campaigns and figure out what customers are expecting when they arrive. A sale may hinge on the context of the ad that sent them there, or the appeal of the site itself.

Do you have your own tips for new AdWords users? Share them in the comments.

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